Reference no: EM132261521
A New York federal judge refused to let a South Korean bank back out of a settlement with Lehman Brothers Holdings Inc., finding that emails sent by lawyers for the banks were enough to enforce the deal. In an opinion filed Wednesday in U.S. District Court in New York, Judge Denise Cote upheld an earlier ruling by a bankruptcy judge that Shinhan Bank is bound to a settlement agreement with Lehman despite having never signed a document formalizing the deal. In 2010, the Lehman estate sued Shinhan, seeking to "claw back" transfers Lehman made leading up to its bankruptcy. Five years later, Shinhan moved to dismiss the lawsuit, and, with the help of a mediator, both banks eventually hammered out an agreement to settle the matter for an undisclosed amount. Court papers show Lehman and Shinhan engaged in back-and-forth emails for several weeks, and on June 28, 2016 a lawyer for Shinhan emailed a lawyer for Lehman to say, "Shinhan just confirmed that they have completed their internal approval process" and that the settlement would be signed within days. Later that day, the bankruptcy court issued an order dismissing the litigation between the two banks in expectation of the settlement. But Shinhan never signed the agreement nor was the settlement amount wired to Lehman. Shinhan has since claimed the deal is invalid because it was never fully executed.
Judge Chapman found the emails from Shinhan’s attorneys showed it had entered into a binding contract, even if the agreement wasn’t fully drafted and signed. On Wednesday, Judge Cote agreed.
1. What are the facts of this case and who are the parties to the lawsuit?
2. What are the required elements of a valid contract?
3. In the article, Bank Bound By Unsigned Lehman Deal Despite Dismissal, it states, “Shinhan and Lehman reached agreement with the help of a mediator in April 2016 — while motions to dismiss were pending. But Shinhan asked for some small changes to Lehman's standard settlement package and then dragged its heels for weeks on signing. Eventually, the judge ruled on the pending motions and dismissed Lehman's claims.” If a party “dragged its heels for weeks on signing”, was it still right for a judge to make the decision to hold Shinhan's “feet to the fire” by forcing them into the agreement even without a signature? Why or why not? Could this be challenged as unlawful? Why or why not?
4. In the article, Bank Bound By Unsigned Lehman Deal Despite Dismissal, it states, “The terms upon which there was continuing negotiation, such as 5 or 10 days to pay Lehman and whether the release agreement should be submitted electronically or in hard copy, relate to the performance of the settlement rather than its material terms,” the judge said. “Precedent dictates that performance tweaks don't count as a lack of agreement,” the judge said. What did the judge mean by “performance tweaks don't count as a lack of agreement,” within the context of her statement? Do you agree or disagree with the judge’s statement? Why or why not?
5. In the article, Judge Rules Lehman Settlement, Affirmed in Emails, Is Enforceable, it states, “We appreciate your consideration in allowing Shinhan Bank additional time to consider your settlement proposal in this matter, which we are pleased to report that Shinhan has agreed to accept,” a lawyer for Shinhan wrote in an April 20, 2016, email to the mediator. Court papers show Lehman and Shinhan engaged in back-and-forth emails for several weeks, and on June 28, 2016 a lawyer for Shinhan emailed a lawyer for Lehman to say, “Shinhan just confirmed that they have completed their internal approval process” and that the settlement would be signed within days. Later that day, the bankruptcy court issued an order dismissing the litigation between the two banks in expectation of the settlement. But Shinhan never signed the agreement nor was the settlement amount wired to Lehman.” Would an e-mail be sufficient to substantiate an agreement, enough that it would not require a signature for a deal to be made? Why or why not? Please support your findings.
6. We hear a great deal of conversation today regarding the Spirit vs. the Letter of the Law. In Judge Denise Cote’s decision, we find that “the bankruptcy court committed no error in its finding that the parties intended to be bound by the settlement regardless of whether Shinhan had signed it yet.” What we are faced with is the intent, and whether or not the spirit or the letter of the law rules in this decision. Define what the spirit of the law vs. the letter of the law is, and discuss how the intentions of both parties could be sufficient enough to create an agreement.
7. In your place of work, have you ever put an agreement together using e-mails only as a written instrument to your agreement? Would you consider that sufficient enough for documentation, and it holding up in court if it were ever challenged? Why or why not?